RELATIONSHIP BETWEEN COMPANY’S TURNOVER GROWTH RATE AND SHAREHOLDERS RETURN ON INVESTMENT

AN ANALYSIS OF THE RELATIONSHIP BETWEEN COMPANY’S TURNOVER GROWTH RATE AND SHAREHOLDERS RETURN ON INVESTMENT IN THE CONGLOMERATE INDUSTRY (A CASE STUDY OF DANGOTE PLC.

ABSTRACT

From the title of this project work, we find out that the aim of the study was to determined the relationship that exist between company’s turnover growth rate and share holder return on investment in conglomerate industry. The literature review suggests two relationships based on firms’ management goals. This relationship will be positive linear or direct relationship after optimal sales growth rate. In this research work the method used in sourcing data was the administration of questionnaires and the interview which was analyzed. The finding revels that an efficient work force contributes to the positive returns on investment. Recommendations were made for the management to adapt more effective approach either with the use of new innovation or technological device to ensure or enhance profitability in the industry and share holders should have knowledge of management activities to see whether it is consistent with their own investment goals or not. In this research work it was discovered that there is relationship between company’s turnover growth and shareholder return or investment. It was also found that investors will get positive return from their investments where a sale is positive. The research work also identified that for investors to get positive return from their investment, the enterprise has to strive hard to increase its sales and profit ability level. Research also contains that an efficient work force contribute to the positive return on investment.

CHAPTER ONE

  • BACKGROUND OF THE STUDY

The primary aim of commercial or economic business venture is to make profit that is appositive return on investment. The machinery put in place to achieve the said goal is an efficient team. The management team are always made up of high caliber of professionals, which is necessitated by the exigencies of modern business times, where efficient and effective decision are the company we find that it does not just exist for itself, but it depends on the fund of investors who in turn require and expect to receive returns on their investment. This in fact is what may be called the reason for the existence of the firm.

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The expected returns are not easy to come by expected when the companies are able to make positive return on sales of goods and services from their operations. For profit to made, the cost of sales must be well managed a long side with management’s ability to take advantage to external opportunities relating to the enterprise when they are available.

A concerning the relationship between company turnover growth and shareholders return on investment there are two schools of thought. One held that a positive linear relationship exist while the other is of the opinion that there exists an optimal sales growth after which growth return relationship becomes negative.

However, the relationship can be seen as depending on the goal of management or sales revenue maximization. Further  more , growth can connote or define in increase in the quality of sales improvement in the quality of sales flowing from the process of development on the other hand . in this  study the former prevails, the purpose of this project work is to examine the nature of relationship between turnover and developing a model analyzing the model of growth return relation within the conglomeration industry.

  • STATEMENT OF RESEARCH PROBLEM

The aim of every investor is to get positive return from his or her investment.  For this to be achieved, the enterprise has to strive hard to increase its sales and profitability level . the statements of the problem   therefore linear relationship exists between shareholder return and turnover growth return exists after an optimal sales growth is reached . these researches tent to find or identify which of this relationship exists in practice .

The statements of the problem therefore are

  1. What relationship exits between sales growth and shareholders return on investment?
  2. How this relationship applies to the conglomerate industry.
  3. How to determine the optimal sales growth that maximizes shareholders return on investment.
    • OBJECTIVE OF THE STUDY

The main objective is to analyze the relationship between companies    turnover growth rate and shareholder return on investment in the conglomerate industry which include:

  1. The relationship between companies turnover growth rate and shareholder return on investment was to found out that investors will get positives return from their investment where sales is positive  .
  2. This relationship applies to the conglomeration industry is the shareholder return and sales growth rate on investment  .
  3. The optimal sales growth rate that maximizes shareholder returns on investment can be determined by getting positive retunes from their investment, the enterprise has to strive hard to increase its sales and profitability levels.
  4. Is positive, in the sense that it helps every investor to get a positive return from his or her investment           .
  5. The implementation of sales revenue maximization for the shareholders investment is to examine the nature of relationship between turnover growth rate and shareholder return on investment.
    • RESEAHCH QUESTIONS
  1. What is the relationship between company’s turnover growth rate and shareholders return on investment?
  2. How does this relationship apply to the conglomerate industry?
  3. How can the optimal sales growth rate that maximizes shareholder return on investment be determined?
  4. is the shareholder return on investment and sales growth positive?
  5. What is the implementation of sales revenue maximization for the shareholder investment?
  • SIGNIFICANCE OF THE STUDY
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Concerning the contending view points on the growth return relationship between sales growth and shareholder return, the study will also seek to find the implication or objectives of sales revenue maximization and profit maximization for the shareholder investments. The researcher will be benefitted to all the company’s return over growth rate and shareholder return and it need to encourage the establishment of policy guidelines on the efficient effective.

1.6 DELIMITATION OF THE STUDY

The declination of this study though very wide was centered on the conglomerate industry. Attention is focused on the department as one because of the multi-product nature of the firm.

Hence, sales will not be in the actual quantity of units sold, but in terms of naira. The shareholders return will be defined in terms of dividends, while the firm selected for this analysis will be one of those listed in Nigeria stock exchange (NSE)

  • LIMITATION OF THE STUDY

This project work had been undertaken within the frame work of these limitations.

TIME CONSTRAINT: time limit impose on the writer does not allow extensive coverage of all the aspect of the subject matter. The writer has been battling     with time at the process of writing this project.

FINANCIAL CONSTRAINT: management of financial resources at the writer’s disposal has forced her to neglect some expensive material and activities which could have been useful to the work and this lead to the option of writing this work with the available material at disposal.

LACK OF RELEVANT LITERATURE: Materials available in the school library are inadequate and greatly affected this write up.

  • DEFINITION OF TERMS.

SHAREHOLDERS: The provider of capital of a company and their goal is to maximize the wealth they haven invested which results in the ownership of the shares of a company.

INVESTMENT: providing or putting money into business so that one may earn more money by means of return from this business ventures.

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GROWTH: an increase in the size of the investment.

RETURN ON INVESTMENT: benefits enjoyed as a result of sacrifice to a business venture.

RELATIONSHIP: ways in which persons or things are united or the effects which they have on each other.

OPERATION: the way things/works are organized as a result of action of people involved.

CONGLOMERATE: Companies that have several businesses whose products or service are usually very different.

INDUSTRY: the company involved in process of producing gods for sales.

FUNDS: amount of money set aside for a special purpose.

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Project topic:AN ANALYSIS OF THE RELATIONSHIP BETWEEN COMPANY’S TURNOVER GROWTH RATE AND SHAREHOLDERS RETURN ON INVESTMENT IN THE CONGLOMERATE INDUSTRY (A CASE STUDY OF DANGOTE PLC.

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